UBS: SWIRE PROPERTIES (01972) could increase its valuation if it sets up a property trust fund, target price raised to HK$26.1.

UBS released a research report stating that if SWIRE PROPERTIES (01972) can establish a private real estate investment trust (REIT), it will be able to open up new channels for asset circulation, which will help change investors' perception of the company. The market may be willing to give a higher valuation for the addition of a new private REIT channel. The bank has reduced the discount on its net asset value (NAV) from the original 50% to 45%, corresponding to an increase in the target price from the original HK$23 to HK$26.1. It maintains a "buy" rating and has raised profit forecasts for 2025 to 2027 by 1% to 2% to reflect the appreciation of the Renminbi. UBS pointed out that SWIRE PROPERTIES has disposed of assets worth HK$58 billion since 2018, which is significant compared to the company's current market value of about HK$121 billion. This demonstrates the company's excellent capital circulation capability. The company has already invested around 67% of its promised HK$100 billion investment plan, and believes that asset circulation will provide greater development opportunities for new projects in Shenzhen Futian and Hong Kong Admiralty. The bank also mentioned that if assets are spun off to create REITs, it will help TAIGA A (00019) reduce leverage and generate regular fee income for the company.